GAO Raises Concerns Over Child Care Fraud in Texas

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Texas is among five states that need to do better at preventing fraudulent claims for federal child care subsidies for low income families, according to a new report.

The U.S. Government Accountability Office issued a report Thursday saying that undercover federal employees were used to check fraud controls in Texas, Illinois, Michigan, New York and Washington. The states each received more than $100 million last year from the Child Care and Development Fund.

The program subsidizes child care for low-income families when a parent works or is in school. The five states do not require relative caregivers to be fingerprinted or visited before billing the government.

"For example, Texas and New York did not verify our fictitious parent and children's (Social Security numbers), which belonged to deceased people," said the GAO, the investigative arm of Congress.

The five states are vulnerable to fraud because they do not adequately verify the information of families and providers and they lack controls needed to prevent fraudulent billing, the GAO report said.

Ann Hatchitt, spokeswoman for the Texas Workforce Commission, which administers the child care subsidies, said a new electronic system will include controls to prevent over-billing. Parents will use an electronic swipe card, much like a debit card, to record the time their children arrive and depart from child care, she said.

"We are very well aware of the potential for fraud," said Hatchitt.

Texas this year distributed nearly $700 million in federal subsidies so low-income families could place their 115,000 children in care, allowing parents to work or be retrained.